After Tesla’s Price Reductions, Game Of Thrones Will Become Electric
What is the purpose of Elon Musk’s electric car giant’s “pricing war”? Rivian Automotive and Lucid Group, two money-losing companies in the US striving to gain a foothold in a fiercely competitive sector, have found it considerably harder to survive as a result of the “price war” on electric cars initiated by market leader Tesla.
Analysts and investors predict that Tesla’s decision to decrease the pricing of its electric cars by up to 20% internationally might bring in more customers to the electric vehicle market, but it will also drive other manufacturers to lower their prices in response or risk falling behind.
Some companies would not be able to afford reduced costs due to their struggles with the high cost of raw materials as well as their much lower production levels when compared to Tesla, which, under the direction of Elon Musk, produced more than 1.3 million cars last year.
Edge Over Rivals
According to CFRA Research analyst Garrett Nelson, Tesla’s action would “strengthen the… its competitive edge over rival manufacturers.”
The majority of startups have changed significantly since their first public offerings in recent years when investors believed these businesses would dominate the electric car sector and replicate Tesla’s previously heady value.
Both Rivian and Lucid are still in the red. Together, they delivered more than 24,000 automobiles in the last year, with Rivian spending more on each car’s construction than it did on its final pricing.
Using statistics from the most recent quarter, the company’s cost of goods sold was around 2.7 times its revenue, whilst Lukid’s cost of revenue was approximately 2.5 times its sales.
Rivian, however, had the highest level of liquidity among US electric vehicle companies at $13.8 billion at the end of the third quarter. With $1.26 billion in cash on hand, Lucid has the second-highest cash reserves after raising $1.52 billion in the fourth quarter.
This provides businesses with a significant “way out” at a time when firms like Faraday Future and the British company Arrival are looking for capital and have issued warnings that they may not be able to continue running their businesses into 2023.
The Electrification Of Game Of Thrones
If they don’t reach their financial objectives, electric car companies will have to deal with serious problems in the next 12 to 18 months, according to Wedbush Securities analyst Daniel Ives.
These corporations’ fourth-quarter earnings reports are anticipated to provide a better view of their financial sheets.
With prices beginning at over $87,000, or $8,000, Lucid is aiming its electric vehicles at the market for premium and sporty-luxury sedans. Following the January sales, less than the Model S sedan’s basic model.
The mass-market vehicle that Lucid, headed by former Tesla executive Peter Rawlinson, intends to compete with Tesla’s Model 3 and Model Y, which start at around $44,000 and $53,000, respectively, has not yet been revealed.
The R1T pickup truck from Rivian begins at $73,000, while the R1S SUV is priced at $78,000.
Before 2026, the business, whose major stakeholder is Amazon, has no intention of selling less expensive vehicles it will produce on the next-generation R2 platform. According to Rivian, the platform will be more cost-effective than cars made on the R1 platform and allow higher manufacturing quantities.
Tesla’s price reductions came just after Fisker’s Ocean SUV, which has a starting price of $37,499 and puts it at greater risk, was put into production by manufacturer Magna Steyr, according to experts.
